This paper discusses recent economic developments and economic outlook and risks of São Tomé and Príncipe. Although São Tomé and Príncipe's economic development is constrained by its insularity, fragility, limited resources, and low capacity as a small island state, this African country has made commendable progress toward greater macroeconomic stability. GDP growth has averaged more than 4 percent per year since 2012, faster than many small islands states, but not sufficiently strong and diversified to meaningfully improve economic prospects and reduce poverty significantly. The forthcoming presidential election, with the risk of extra budgetary spending and continued weakness in the banking sector, are the main sources of short-term risks to the economic outlook.